Jefferies starts Aphria at Buy, says valuation 'not reflective of reality'. Jefferies analyst Owen Bennett initiated coverage of Aphria (APHA) with a Buy rating and C$15 price target. The stock closed yesterday down 33c to $6.41. The analyst says the company scores highly on his "strategic scorecard," or third overall behind only Canopy Growth (CGC) and Aurora Cannabis (ACB). Despite a "strong global outlook," Aphria's valuation is the cheapest across the space, with allegations around inflated assets/insider deals weighing on the shares, Bennett tells investors in a research note. The analyst expects a "significant re-rating" in the shares with "these issues now seemingly cleared up." He points out that the company's questionable relationships have been severed and a special committee review found assets had not been falsely inflated. Bennett believes Aphria continues to execute and that its valuation is "not reflective of reality."

Canopy Growth has finalized an all-cash transaction to acquire This Works for a purchase price of C$73.8M. Founded in 2004, This Works has cemented itself as a global leader in natural skincare and sleep solutions with a devout customer base spanning 35 countries. This Works CEO, Dr. Anna Persaud, will remain at the helm of business operations post-acquisition to continue moving the company forward.

Canopy Growth (CGC) is pleased to announce the appointment of Mike Lee to its executive leadership team in the acting role of CFO, effective June 1. Mike's permanent role as CFO will commence upon receiving Health Canada security clearance required for all Officers and Directors of the company. Mike brings a wealth of experience from the consumer goods & beverages industry, having worked for companies such as E. & J. Gallo Winery, PepsiCo (PEP), and recently Constellation Brands (STZ), where he served as Senior Vice President & CFO for their $3B Wine & Spirits Division.

U.S. CBD market could grow to $15B in five years, says Piper Jaffray. The FDA's previous decision that red yeast rice is an acceptable dietary supplement with naturally occurring levels of Monacolin K may set precedent for full spectrum or broad spectrum hemp extract that contains cannabidiol, or CBD, Piper Jaffray analyst Michael Lavery tells investors in a research note. However, CBD is the active ingredient in FDA-approved Epidiolex, which complicates its regulatory treatment, the analyst adds. He notes that because CBD is in an approved drug, the FDA rules do not allow it to be marketed as a dietary supplement. Nonetheless, given the red yeast rice precedent, the analyst "would logically expect" the FDA to allow products with hemp extract to be marketed as over-the-counter dietary supplements, "even if its views on CBD isolate may be less predictable." Lavery believes the U.S. CBD market could be $3B-$6B in 2020, and grow to $8B-$15B in five years. The analyst has Overweight ratings on both Canopy Growth (CGC) and Tilray (TLRY).

Canopy Growth initiated with a Buy at Alliance Global Partners. Alliance Global Partners analyst Aaron Grey initiated Canopy Growth with a Buy rating and C$75 price target, citing his view that the company can become the "global leader in cannabis" following its game-changing acquisition agreement with Acreage Holdings (ACRGF) to give it access to the world's largest cannabis market in the U.S. Though he does not foresee Canopy being profitable until FY21, Grey noted that he does expect the company to be profitable in the Canadian cannabis market as it continues with its international expansion.